Displaying items by tag: SmurfitStone Container Corporation

Creating a $9 Billion Leader in the North American Paperboard Packaging Market

RockTenn and Smurfit-Stone Container Corporation today announced that the Boards of Directors of both companies have approved a definitive agreement under which Smurfit-Stone will become a wholly owned subsidiary of RockTenn. The aggregate consideration, consisting of 50% cash and 50% RockTenn stock, is valued at $35 per-share of Smurfit-Stone common stock, and represents a 27% premium to Smurfit-Stone's closing stock price on January 21, 2011. The aggregate equity value of the transaction, based on the closing price of RockTenn's common stock on January 21, 2011, is approximately $3.5 billion.

This strategic transaction, unanimously approved by the Boards of Directors of both companies, will create a $9 billion leader in the North American paperboard packaging market. Upon closing, RockTenn will maintain its headquarters in Norcross, GA.

Smurfit-Stone is one of the industry's leading integrated containerboard and corrugated packaging producers and one of the world's largest paper recyclers. Smurfit-Stone has manufacturing mill capacity of 7.0 million tons, and when combined, RockTenn will have 9.4 million tons of total production capacity, including 7.5 million tons of mill production in the attractive containerboard market.

RockTenn's Chairman and Chief Executive Officer, James A. Rubright said, "RockTenn's acquisition of Smurfit-Stone is another major step in our transformation of RockTenn to be the most respected company in our business with a laser focus on exceeding our customers' expectations and creating long term shareholder value. The containerboard and corrugated packaging industry is a very good business and U.S. virgin containerboard is a highly strategic global asset. With this acquisition, RockTenn's fiber input ratio will be 55% virgin and 45% recycled. We believe this transaction provides the greatest possible career opportunities for our co-workers from both companies."

Smurfit-Stone's Chief Executive Officer Patrick J. Moore said, "The Smurfit-Stone management team and the board of directors are sharply focused on creating value for shareholders. This transaction immediately achieves this objective, creating a stronger combined company that is well positioned to deliver long-term value to shareholders and high-quality, innovative packaging solutions to its valued customers."

Combined RockTenn and Smurfit-Stone

• #2 producer of North American containerboard
• #2 producer of coated recycled board
• Management team with strong record of shareholder value creation and excellent record of integrating acquisitions
• Balanced fiber input mix with 55% virgin fiber and 45% recycled fiber
• Expands Rock-Tenn's geographic footprint to the Midwest and West Coast
• Opportunity to recognize benefits from approximately $500 million of NOLs at Smurfit-Stone
• Conservative capital structure with significant liquidity
• Opportunity to improve results through cost reduction and capital investment

Transaction Summary

Smurfit-Stone will become a wholly owned subsidiary of RockTenn. For each share of Smurfit-Stone common stock, Smurfit-Stone stockholders will be entitled to receive 0.30605 shares of RockTenn common stock and $17.50 in cash, representing 50% cash and 50% stock. The aggregate consideration is $35 per Smurfit-Stone common share. The consideration represents a 27% premium to Smurfit-Stone's closing stock price on January 21, 2011.

The aggregate purchase price being paid for Smurfit-Stone's equity in the transaction is approximately $3.5 billion, consisting of approximately $1.8 billion of cash and the issuance of 30.9 million shares of RockTenn common stock. Following the acquisition, RockTenn shareholders will own approximately 56% and Smurfit-Stone shareholders will own 44% of the combined company.

In addition to the equity consideration, RockTenn will assume Smurfit-Stone's net debt and pension liabilities. As of December 31, 2010 Smurfit-Stone's net debt was $0.7 billion and its pension liabilities were $1.1 billion ($0.7 billion after-tax). RockTenn has received $3.7 billion in committed bank financing from Wells Fargo Bank N.A., Rabobank and SunTrust Bank to finance the cash portion of the transaction, to refinance existing debt and to provide liquidity for the combined operations.

The purchase price, including Smurfit-Stone's net debt and after-tax pension liability as of December 31, 2010, represents a multiple of 6.1x Smurfit-Stone's annualized adjusted EBITDA of $820 million for the three months ended December 31, 2010.

The transaction is expected to close in the second calendar quarter of 2011 and is subject to customary closing conditions, regulatory approvals, as well as approval by both RockTenn and Smurfit-Stone stockholders.

Advisors

Wells Fargo Securities acted as exclusive financial advisor to RockTenn and King & Spalding LLP acted as legal counsel. Smurfit-Stone's financial advisor was Lazard and its legal advisor was Wachtell, Lipton, Rosen & Katz.

Conference Call and Webcast

RockTenn will host a conference call to discuss our results of operations for the first quarter of fiscal 2011, our acquisition of Smurfit-Stone Container Corporation and other topics that may be raised during the discussion at 8:30 a.m., Eastern Time, on Monday, January 24, 2011. The conference call will be webcast live with an accompanying slide presentation, along with a copy of this press release, at www.rocktenn.com.

Conference Call and Webcast

Monday, Jan. 24, 2011 - 8:30 a.m. Eastern Time

• Conference call number: U.S. (888) 790-4710
• Passcode: ROCKTENN (Please dial in 10 minutes before conference call start time)
• The call will also be webcast and available at: www.rocktenn.com

Replays

• A replay of the conference call will be available through March 15, 2011 at U.S. (866) 351-2785
• Passcode: ROCKTENN
• A replay of the webcast will be available at www.rocktenn.com

Source : RockTenn

Smurfit-Stone Container Corporation (NYSE: SSCC) today reported net income of $49 million, or $0.49 per diluted share, for the fourth quarter ended Dec. 31, 2010, compared with net income of $65 million, or $0.65 per diluted share, for the third quarter of 2010, and a net loss attributable to common stockholders of ($6) million, or ($0.02) per share, for the fourth quarter of 2009.  

Smurfit-Stone's fourth quarter 2010 adjusted net income was $62 million, or $0.62 per diluted share, down seasonally from adjusted net income of $76 million, or $0.76 per diluted share, in the third quarter of 2010, and an adjusted net loss of ($16) million, or ($0.06) per diluted share, in the fourth quarter of 2009.  The adjustments in the third and fourth quarter of 2010 were primarily the exclusion of costs related to reorganization and restructuring.

Patrick J. Moore, Smurfit-Stone's Chief Executive Officer, commented, "Fourth quarter performance was strong, meeting our expectations, and demonstrating that our initiatives to improve productivity and lower costs are enabling us to deliver improvement in earnings, margins and cash flow."  

Adjusted EBITDA for the fourth quarter of 2010 was $205 million, down from $239 million in the third quarter of 2010, and up from $67 million in the fourth quarter of 2009.  The sequential decline in adjusted EBITDA reflects seasonally lower volumes, cost inflation, the impact of a work stoppage at the Company's La Tuque, Quebec, mill, and market-related downtime taken in December in order to balance supply and demand in the Company's system.    

Net sales for the fourth quarter of 2010 were $1.63 billion, unchanged from the third quarter of 2010 and up 18 percent compared with sales of $1.38 billion in the fourth quarter of 2009.  The stable sales in fourth quarter 2010 reflect modestly higher selling prices, offset by seasonally lower volumes.

Fourth Quarter Highlights

• The Company achieved strong financial results despite higher reclaimed fiber costs, a work stoppage at its La Tuque facility and market-related downtime in the quarter.
• Initial SG&A cost reductions were completed in the fourth quarter that will produce net savings of $50 million in 2011.
• The Company ended the quarter with cash of $449 million, down only $15 million from the end of the third quarter, despite capital expenditures of $67 million and a voluntary $105 million pension contribution in the quarter.
• The Company's underfunded pension position improved to $1.13 billion at year end from $1.45 billion at June 30, 2010, reflecting strong asset returns and contributions totaling $199 million in 2010.
• The Company ended 2010 with net debt of $745 million and liquidity of nearly $1 billion.    

Outlook

Smurfit-Stone expects lower sequential earnings in the first quarter of 2011 compared with the fourth quarter of 2010.  Moderate improvement in pricing will be more than offset by seasonally higher energy usage, cost inflation in fiber and energy, and the impact of employee benefit cost timing.  

Conference Call and Webcast

The previously scheduled conference call and webcast will not be held.

Smurfit-Stone Container Corporation announced that all of its U.S. paper mills have been recommended for chain-of-custody certification to the Sustainable Forestry Initiative ("SFI"), Programme for the Endorsement of Forest Certification ("PEFC") and Forest Stewardship Council ("FSC") standards.

Having its mill system fully certified allows Smurfit-Stone to trace and verify the origin of the fiber used in its papermaking operations.  This is becoming an increasingly important requirement for many companies that are looking to partner with packaging manufacturers that can help them meet their social and environmental goals.

"Smurfit-Stone is committed to responsible and sustainable fiber sourcing, and completing this certification process division-wide reaffirms our beliefs," said Mike Exner, Senior Vice President and General Manager, Mill division.  "The chain-of-custody certification also helps us better support our customers in meeting their sustainability goals."

The chain-of-custody certification audits were conducted over a two-week period from November 29, 2010, to December 3, 2010.  Smurfit-Stone's mills will have the following certifications:

• SFI Certified Fiber Sourcing – U.S. mills' procurement system
• SFI chain-of-custody certification – U.S. mills
• PEFC chain-of-custody certification – all pulp and paper mills
• FSC chain-of-custody certification – all pulp and paper mills

Smurfit-Stone's Matane, Quebec, mill has also been recommended for PEFC and FSC certifications, and its La Tuque, Quebec, mill received PEFC and FSC certifications in 2009.  Smurfit-Stone anticipates extending the chain-of-custody certifications within its converting operations throughout 2011 and 2012.

Smurfit-Stone Container Corporation is one of the industry's leading integrated containerboard and corrugated packaging producers and one of the world's largest paper recyclers. The company is a member of the Sustainable Forestry Initiative® and the Chicago Climate Exchange. Smurfit-Stone generated revenue of $5.57 billion in 2009; has led the industry in safety every year since 2001; and conducts its business in compliance with the environmental, health, and safety principles of the American Forest & Paper Association.

www.smurfit-stone.com

SOURCE Smurfit-Stone Container Corporation